Why You Don’t Need A Mortgage Broker

Following on from my recent post about Estate Agents, it reminded me of a similar experience we once had with a Mortgage Advisor.

Five years ago we started house-hunting, which is always an exciting but stressful task, and being our first step onto the property ladder wanted to make sure everything would go as smoothly as possible. With that in mind we decided against using our Estate Agent’s in-house mortgage consultancy and instead requested the services of an independent Mortgage Broker.

The reasons were simple: he would be impartial, and – having had over twenty years’ experience in the industry – should be able to get us the best deal possible in the most-straightforward manner.

These are of course the reasons you hire any professional. Imagine you had a leaky tap; sure you could try and fix it yourself, but a professional plumber will do a far better job and give you the peace of mind that the problem is solved in the most effective and efficient way.

Naturally I had done some research before our first meeting with the Mortgage Advisor. We knew how much deposit we had saved, as well as knowing that if we could get under 70% LTV (loan-to-value), we would get a much better deal. With these figures in mind I’d used comparison sites to find roughly what kind of deal we could expect.

Unfortunately, as it transpired, by this point I already knew more than the Mortgage Advisor. Imagine my surprise when at our meeting he merely opened a basic Windows application (which looked at least 10 years old – it was styled in ‘Classic Mode’ grey) and only asked our deposit figure and potential house value. He then proudly displayed a primitive set of tabular results with ridiculous glee as if he had produced something the Magic Circle would’ve applauded. It was even less information than I had found online in a matter of minutes.

It only got worse. He then keenly said: “Look, if I click here you can even order the results by APR. If I click twice, the lowest comes to the top!”.

My heart sunk as the realisation hit: We had been swindled. Not by our individual Mortgage Broker, but by the industry itself.

Before the Internet, a Mortgage Advisor had a vast and complex job role – involving staying in the loop with banks and other lenders, assessing clients’ financial abilities and finding and negotiating the best deals possible. Without a linked system this was a laborious task, mainly built on trust and relationships, reliant on exceptional knowledge and business connections.

But of course, technology has changed all that. Now a layman with a basic grasp of finance and computing can replicate all that information with a few online form entries and clicks of a button.

Put simply, much like Estate Agents will soon find out, there is no longer an industry for generic Mortgage Advisers in the modern world. Yes, there will be bespoke cases where professional advice may be needed, but for the majority of clients there is no need for the middleman.

Our Mortgage Advisor wasn’t to know, in fact that is indeed the problem – many of these industries know nothing different to their own bubble, so they just carry on regardless. But in a world where simplification rules, occupations like this need to diversify from the norm in order to succeed.

We parted ways with our Mortgage Advisor very quickly. I hope he’s found a way to alter his working life. No-one ever achieved standing still.